Certain types of mistakes in the formation of a contract may affect the validity of a contract

Mistakes of fact which affect the validity of a contract are referred to as operative mistakes. The law recognizes various types of operative mistakes for example:

Common or shared mistake: this is a mistake as to the existence or ownership of the subject matter. Both parties make the same mistake. Each party appreciates the others intention and accepts the same, but both are mistaken about an underlying fundamental fact. Common mistake renders a contract void in two circumstances.
o Cases of res extincta: the subject matter does not exist. This scenario is embodied in section 8 of the Sale of Goods Act, Cap 31. It is illustrated by inter alia the decision in Couturier V. Hastie.
       o Cases of res sua: the subject matter belongs to the party purporting to purchase the same (Bingham V. Bingham).

Mutual Mistake: this is a mistake as to the subject matter. The parties are at cross purposes or misunderstand each other. There is no agreement between them for want of Consensus ad idem. The purported agreement is void. The decision in Raffles V.Wichelhouse illustrates this principle.
Unilateral mistake: this is a mistake as to the identity of the other party to the contract.
It arises in circumstances in which a fraudulent person misrepresents his identity so as to obtain goods on credit or other favourable terms which he promptly sells to an
unsuspecting third party or a bonafide purchaser. The dispute is ordinarily between the original seller and the bonafide purchaser. The goods or their value are recoverable if the
original seller demonstrates that the contract between him and the fraudulent person was void for unilateral mistake. It must be evident that:
o The seller dealt with a person other than the person intended.
o The person dealt with was aware of this fact.
o The identity of the person the seller intended to deal with was fundamental to the contract.
The decision in Cundy V. Lindsay and Co. exemplifies this type of mistake.
Mistakenly signed documents: this is a mistake as to the nature of the contract i.e. signing the wrong contract. Such a mistake renders the contract voidable at the option of the innocent party.
Mistake as to quality of subject matter: such a mistake renders the contract voidable at the option of the innocent party.


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